The Best SMB Software Selection Tactics

Jul 29, 2014

With hundreds of software solutions available for nearly every business niche, researching software has become an overwhelming task. As a services company developing custom software products for our clients we believe it is a great idea for the clients to become familiar with the most effective tactics SMEs use to evaluate software for their organizations. It is in fact only too reasonable to make sure there is no adequate off-the-shelf solution available before they decide to build a custom solution from scratch. In order to establish if the software needed is available in the market, some big IT departments execute complicated complex analyses during the selection process but research conducted by US based consulting firm Software Advice™ uncovers that small and medium-sized (SMB) businesses use quite a different approach. The set of the most effective tactics small businesses use to evaluate software for their organizations was compiled on the basis of the responses of more than 300 company decision-makers from multiple industries.

The decision-makers were supposed to specify which of the 14 software selection tactics presented they found most effective for choosing the right product to meet their business needs. The tactic to be “most effective” had to meet two criteria: (1) having a high impact on the outcome of the project and (2) leading to relatively high satisfaction levels in the systems buyers ultimately selected. In order to determine the impact of each tactic on the buyers’ satisfaction levels, Software Advice™ divided the percentage of buyers who did not apply a tactic and were extremely dissatisfied (giving a “1” or “2” rating) by the percentage of buyers who were extremely dissatisfied and did use the same tactic. The resulting number was the “impact score,” which represents the likelihood of the buyer being extremely dissatisfied with their selection if they did not apply the tactic.

Here are the software selection tactics listed in alphabetical order:

assess vendor financial viability

build a list of business and technical requirements

check references for software vendors

define a budget in advance

determine processes that would be affected

develop a custom script for demos

develop business case with project scope, expected ROI

estimate total cost of ownership (TCO)

have an attorney review subscription agreement

have end users involved in the selection process

have someone from IT lead the project

involve a senior executive in the project

prepare a request for information (RFI) or request for proposal (RFP)

use a third-party integrator

Surprisingly, the most-used tactics were not always the most effective ones: SMBs very often assess vendor financial viability and/or involve a senior executive in the project although both practices are not very powerful in terms of impact. The two most effective tactics cited by respondents turned out to be checking vendors’ references and having software agreements reviewed by an attorney. These two tactics had a positive impact on both the outcome of a software selection project and buyer satisfaction. “With the advent of sites like Yelp, TripAdvisor and the like, buyers have become accustomed to using customer opinions to help make important purchasing decisions. In fact, these crowdsourced opinions have become an essential part of the online consumer research process. It allows them to confirm that customers had a positive experience before they buy. Our research confirms that this is just as true among SMBs evaluating software,“ said Ashley Verrill, software researcher at Software Advice.

The software selection research also showed that the majority of buyers involve end-users in their selection process – a tactic we found to be rather ineffective. Interestingly, buyers who involve end-users are more likely to report high levels of dissatisfaction in their software selection search. According to Verrill, “I’d attribute this outcome to companies being a victim of having ‘too many cooks in the kitchen.’ While it’s necessary to understand how the software will be used day-to-day, involving end-users could take the project in the wrong direction. End users won’t have the context of knowing the whole scope of the project; for example, they are unlikely to weigh important factors such as integration and project budget.” Some of the key findings from the data gathered include:

Buyers who did not check vendor references were 5.2x more likely to be extremely dissatisfied with their software purchase than buyers who checked reference.

71% of buyers surveyed involved end-users in the process, which the research found to be an extremely ineffective tactic.

Only 20% of software selection projects were led by executive-level employees; most were led by those in managerial roles.

more than 30% of buyers are highly satisfied with the software they have chosen.

The most popular tactic used to evaluate software (assessing processes affected by the software) has actually a low impact on selection outcome and satisfaction.

Many of the tactics listed seem – at least partially – relevant for those who need to find, assess and select a software development services provider with whom to build their custom software solution. It might be insightful to be able to find out about the conclusions drawn from a similar research project in this sourcing area.